Planning To Buy Critical Illness Insurance? Look For These 6 Features

Insurance providers today are cognizant of how universal the anxieties around serious injury and critical illness are. In these times of expensive healthcare and invasive procedures, preparing for these situations is advised by most providers. In an effort to incentivise investing in critical illness insurance, insurance providers have sought to make it as accessible as possible to people across all income brackets. The insurance market is also replete with many options for people to choose from, but one might have trouble discerning the differences between what is mediclaim and what is health insurance. Therefore let us take a closer look at the fundamentals of critical illness insurance and the features to look out for.

Critical illnesses are medical conditions which cause prolonged sickness in a person, where the ailment has a risk of becoming fatal if not rectified or treated immediately. Critical illnesses are the most risky, as they lead to rapid deterioration. Some common types of critical illness are Cancer, Heart Disease, Kidney Failure, Strokes, Paralysis, motor neuron diseases, lung disease and more. Policies such as Critical Illness Insurance are driven towards safeguarding the insured policyholder and their dependents from financial duress at times when the insured patient may be rendered incapacitated by illness and will require financial support for any required treatment procedures, tests and post-op recovery costs.

Critical illness insurance is different from a mediclaim and health insurance, as it aids a policyholder with their medical expenses when they suffer from one of the illnesses stipulated under critical illnesses (by the insurance provider) and require treatment for the same. The insurance providers then give a lump sum payment to the insured to help them cover treatment, surgery and recovery costs along with funds that are adequate for maintaining any loans that the insured and their dependents may have. Generally, critical illness insurance covers somewhere between 8 to 30 critical illnesses which are always listed by the insurance provider at the time of purchasing the aforementioned policy. The costs thus incurred in the course of treating these illnesses are usually high, often without adding the existing hospitalisation costs that the insured may have to pay by themselves at the time of admitting.

Let us look at some of the features of Critical Illness Insurance and how they aid a policyholder:

● Coverage

Critical illness insurance generally covers 8 to 30 critical illnesses which are listed by insurance provider at the time of purchasing the policy.

● Lump Sum Payment

A policyholder can choose to avail their payment against the critical illness treatments as a lump sum payment from the insurance provider after the policyholder has been diagnosed with any of the listed ailments.

● Prompt Claim Process

Claims for critical illness insurance is promptly processed compared to other health insurance claims as critical illnesses are prone to rapid deterioration and needed to be treated and stabilized immediately.

● Income Replacement

Being incapacitated by critical illness, especially for a primary income earner can cause disturbance in the income patterns of the insured or even cease. Therefore, some critical illness insurance plans offer the supplementary aid of allocating a share of the lump sum coverage amount as staggered income to the policyholder.

● Choice of Payout Methods

A key benefit of critical illness insurance is that it gives the insured the liberty to choose how to use and receive their lump-sum payment to support their medical expenses. Policyholders can use the received payout to cover co-pays, deductibles, overhead medical expenses, treatments and doctor consultation fees.

● Tax Benefits

Premiums paid towards a critical illness insurance policy are eligible for tax deduction for a sum of up to Rs 25,000 if you are under 60 years of age. For senior citizens above the age of 60 it is up to Rs 75,000 as dictated under Section 80D of the Income Tax Act, 1961. The lump sum payout subsequently received by the policyholders is also exempted from taxation.

Since buying critical illness insurance is an important life decision, one must duly consider the following factors:

1. Illnesses Covered

A policyholder should go through all policy literature and read through the comprehensive list of diseases that are listed under their care. These lists often vary across insurance providers. Routine health check-ups reviewing the possibility of any hereditary illnesses are also essential.

2. Coverage

One should review their coverage requirements as per their needs and critical illnesses they may be especially prone to. Although standard health insurance policies can be helpful with coverage, they cannot cover costly heart, kidney or lung diseases. Therefore one should invest in critical illness insurance plans as they offer ample coverage, and support costs that may be incurred in the course of recovery.

3. Compare

Many insurance providers offer critical illness riders that can be added to existing insurance plans at an added premium cost. These riders can be helpful in the event of illness, but before buying a critical illness plan; one should compare the costs and coverage between a standalone critical illness plan and an additional rider to an existing plan.

4. Exclusions

Certain illnesses and surgical procedures may not be covered under critical illness insurance. Additionally, before purchasing a critical illness insurance one should check the sub-limits the provider may have in terms of room costs, ICU charges at the time of hospitalisations. One should go for critical illness policies which have minimal or no sub-limits within their coverage terms.